Of Keyens, Money, and Spaceships

Let’s geekout.

With the CERN's Large Hadron Collider coming fully on line in only a few months, the economic crisis could find a solution, but not, perhaps, in the way one might expect.

            Let’s say that a source of energy is discovered with CERN, and this energy can do nothing but run spaceships that could colonize other planets.

            Immediately massive projects would begin in the most technologically (capitally) developed nations, probably at the expense of both government and private business funded by a slush of credit made possible through central banks and central governments. That slush of credit, instead of doing what it does these days and inundating some hapless, trendy part of the economy and causing useless and disorienting bubbles or funding another no-win war, would fuel a useful project which, like a Roman fountain, would distribute economic benefits to the whole society.

Like WWI or WWII or the Pyramids of Egypt, the advances in the division of labor, and the countless parallel but incidental technological discoveries would drive the whole economy of the nation to new heights of production, which would "pay back" the negative effects of inflation with gross increases in productivity in the whole economy, leaving real wages higher, taxes on greater profits balancing the government’s budget, and the economy stronger fundamentally.

This magical pattern of capitalist growth was discovered and its institutions outlined by John Maynard Keynes.

The economic crisis—the net negative effects of creating more money in the economy—happened because the suburbs weren’t spaceships. There were no productive discoveries made because of the artificial concentration of money on house building. It was just consumption, which could not "pay back" the negative effects of inflation with exponentially greater production per input.

Greenspan, the veritable Captain Kirk of the Keynesian economy, thought that the economy had phase shifted through technology, and that the negative effects of monetary inflation were at thing of the past. He was right, the economy has changed. But his fallacy is he treated intensive capital as though it were extensive capital; he treated a cell phone economy like a rotary one. Our society has no spaceships, no pyramids, no centralized productive project to fuel the general growth of the economy. The growth of the economy comes from decentralized and unpredictable entrepreneurial discovery.

If the Large Hadron Collider fizzles, and we don’t get our spaceships, should we delete these institutions? Could we at least build in an "Off" switch for those times when there aren’t any pyramids around to build?

It would probably be easier to just build the ships.